Executive Briefings

Alignment Is Not Just for Cars

Analyst Insight: Alignment is the positioning of parts so they are in their proper position to run correctly – as in car parts. Alignment is also the ability to optimize the business results by aligning people, programs and business processes. According to Supply Chain Insights, Alignment continues to be one of the top three supply chain business initiatives in 2015. – Mickey North Rizza, VP Strategic Services, BravoSolution

Alignment Is Not Just for Cars

Alignment can seem daunting.  It is, in most cases, the missing piece to success.  Just ask anyone who has a car out of alignment as they turn a corner too fast or stop too quickly – it can be a detractor to dependable driving and can cause an accident.  Business strategist Larry Myler noted that business strategy is all about alignment.  Larry uncovered three key points of business strategy alignment:

- 65 percent of organizations have an agreed upon strategy

- 14 percent of employees understand the organization’s strategy

- Less than 10 percent of all organizations successfully execute upon a strategy

Business Strategy.  When creating a business strategy, focus on simplicity: what your customers buy and what products/services you supply. If you lose track of the basics, you will end up misaligned as an organization. A clear business strategy, founded in improving the synchronization of supply and demand, will help you avoid misalignment.

Strategy Communication.  Communication seems easy enough but during the translation, employees can become misaligned. Remember only 14 percent understand the strategy.  The localization (“how does this affect my department”) of the business strategy requires vigorous attention to avoid misalignment. Like cars, employees can easily become misaligned.  Misalignment is usually caused by one of three factors:

1. 30 percent is caused by data

2. 65 percent is due to different definitions

3. 5 percent is due to different drivers      

Let’s break it down with a look at one strategic objective communicated to the employees:  “Attain lower overall costs than our competitors”.  Employees read this statement and may interpret it differently: 

1. 30 percent will conclude that our business is not as low cost as our competitors. 

2. 65 percent will assume that we will now go through a period of rigorous cost controls and that could mean layoffs.

3. 5 percent will think they need to cut their budgets, reduce headcount, redesign the organization, etc. 

All are valid based on their view of the business, but each can quickly lead an organization astray from its intended direction.  It is up to those that are laying out the strategy to be concrete in their definition, data and drivers so that all groups can collectively align around the right solution, maximizing business potential.

Strategy Execution.  This is the most important step of the three, yet less than 10 percent of organizations successfully execute their strategy.  If you have car trouble, it comes down to running or not and how well it runs.  In most cases we just need it to run, get us to and from our destination at a decent cost.  For an organization, strategy execution is similar, it must understand what trade-offs will be made.  This could include metrics and goals to improve and change behaviors; recognizing and rewarding the new behaviors and decision making process; and developing a culture of innovation. 

                                                   The Outlook

The bottom line – strategic business alignment isn’t easy, just like many car repairs.  Thirty-five percent of businesses don’t agree on strategies, 86 percent of employees don’t understand the organization’s strategy – due to data, definition or drivers – and 90 percent of organizations do not successfully execute upon a strategy.  The outlook is bleak unless you look under the hood in the organization to understand where the misalignment occurs and repair it by aligning.

Alignment can seem daunting.  It is, in most cases, the missing piece to success.  Just ask anyone who has a car out of alignment as they turn a corner too fast or stop too quickly – it can be a detractor to dependable driving and can cause an accident.  Business strategist Larry Myler noted that business strategy is all about alignment.  Larry uncovered three key points of business strategy alignment:

- 65 percent of organizations have an agreed upon strategy

- 14 percent of employees understand the organization’s strategy

- Less than 10 percent of all organizations successfully execute upon a strategy

Business Strategy.  When creating a business strategy, focus on simplicity: what your customers buy and what products/services you supply. If you lose track of the basics, you will end up misaligned as an organization. A clear business strategy, founded in improving the synchronization of supply and demand, will help you avoid misalignment.

Strategy Communication.  Communication seems easy enough but during the translation, employees can become misaligned. Remember only 14 percent understand the strategy.  The localization (“how does this affect my department”) of the business strategy requires vigorous attention to avoid misalignment. Like cars, employees can easily become misaligned.  Misalignment is usually caused by one of three factors:

1. 30 percent is caused by data

2. 65 percent is due to different definitions

3. 5 percent is due to different drivers      

Let’s break it down with a look at one strategic objective communicated to the employees:  “Attain lower overall costs than our competitors”.  Employees read this statement and may interpret it differently: 

1. 30 percent will conclude that our business is not as low cost as our competitors. 

2. 65 percent will assume that we will now go through a period of rigorous cost controls and that could mean layoffs.

3. 5 percent will think they need to cut their budgets, reduce headcount, redesign the organization, etc. 

All are valid based on their view of the business, but each can quickly lead an organization astray from its intended direction.  It is up to those that are laying out the strategy to be concrete in their definition, data and drivers so that all groups can collectively align around the right solution, maximizing business potential.

Strategy Execution.  This is the most important step of the three, yet less than 10 percent of organizations successfully execute their strategy.  If you have car trouble, it comes down to running or not and how well it runs.  In most cases we just need it to run, get us to and from our destination at a decent cost.  For an organization, strategy execution is similar, it must understand what trade-offs will be made.  This could include metrics and goals to improve and change behaviors; recognizing and rewarding the new behaviors and decision making process; and developing a culture of innovation. 

                                                   The Outlook

The bottom line – strategic business alignment isn’t easy, just like many car repairs.  Thirty-five percent of businesses don’t agree on strategies, 86 percent of employees don’t understand the organization’s strategy – due to data, definition or drivers – and 90 percent of organizations do not successfully execute upon a strategy.  The outlook is bleak unless you look under the hood in the organization to understand where the misalignment occurs and repair it by aligning.

Alignment Is Not Just for Cars